Channel Sponsor - Turnaround

The need to change: What ASC owners can learn from 3 legendary Chicago businesses

Written by Laura Dyrda |
July 31, 2014

Many ambulatory surgery centers around the country are small businesses, owned and operated by entrepreneurial-minded surgeons who opened their doors some years ago.

Now, as the healthcare landscape changes and new surgeons are rising in the leadership ranks — sometimes even sons or daughters — ASC owners are searching for ways to successfully navigate this transition. Their struggles are hardly different from those of other small businesses and family-owned businesses, including three featured in a recent Chicago Tribune article "How legendary Chicago family businesses faced the need to change."

The article is based on Lloyd Shefsky's book, "Invent, Reinvent, Thrive: The Keys to Success for Any Start-Up, Entrepreneur or Family Businesses" which features the Johnsons of Johnson Publishing, Pritzkers of Hyatt Hotels and Pritzker companies and Crowns of Henry Crown & Co.

Each family faced different challenges as the business was passed from one generation to the next, especially during times of intense change in the industry. Here are the lessons learned and how they can apply to changing ASCs:

1. Chart a course toward transparency. The elder Pritzkers were business geniuses, but chose not to share information about "inner workings" of their businesses or investments, which lead to huge problems down the road. When younger generations took over and endeavored to improve transparency, lawsuits ensued.

While this wasn't mentioned in the Tribune article, keeping operations under secrecy could also lead to confusion and disruption later on if successors don't understand the foundation on which the company was built. Healthcare is moving toward transparency from many angles — including transparent pricing for surgery, Medicare payments, quality metrics and outcomes reports. But revealing this information after years under wraps opens Pandora's Box.

The Pritzker business successors eventually resolved their issues with a "massive reinvention of ownership and governance." Taking small steps if necessary to become more transparent within the ASC's clinical and business dealings could make the transition smoother for owners.

To begin introducing data transparency, some ASCs are blinding the overall quality and cost data so each surgeon can check their individual benchmarks against the group and discretely make adjustments. Others are unblinding the data, hoping competitiveness amongst the surgeons will spark conversations about how surgeons can improve and peer pressure to achieve better results.

2. Get outside experience. Steven Crown, a third-generation family member in Henry Crown & Co., struggled to work alongside non-family members who knew eventually he'd become their boss. His mistakes were corrected before he could learn from them. As a result, Steven left the company for outside experience before returning to the family business.

ASC owners bringing their younger physician partners into ownership are careful to avoid similar traps. The residency and fellowship programs allow surgeons to gain different experiences before settling in at a practice, and opportunities such as traveling fellowships from professional organizations give even seasoned surgeons the ability to travel around the world and learn from the best and brightest overseas. They can also attend business-oriented conferences to network and learn what others in the industry are doing.

Learning how other practices function in different regions of the country can breathe new ideas into a mature practice and build a solid foundation for success in the future.

3. Adapt to the industry before you're forced out. When things are done the same way for decades, it's hard to approach change, even if stagnation will ruin your business. John H. Johnson experienced this inertia head-on as the print media industry was disrupted toward the end of his career. He knew without making changes to the business he'd built, it may not survive.

Still, he wasn't up for the task of cutting staff. So, he let his daughter do it.

It's no secret the ASC business is changing more rapidly than ever with new technology, techniques and opportunities to improve the patient experience. But purchasing expensive new equipment or learning data systems over a weekend aren't always an option. Implementing electronic health records is a thorn in many experienced surgeons' sides while software platforms and iPad use is often second-nature to surgeons just out of training.

Some surgeons nearing retirement are bringing in younger surgeons to make these and other business and operational changes in the practice. This might mean learning a new technique or negotiating risk-sharing models like accountable care organizations or bundled payments with insurance companies.

As her father's successor, Linda Johnson was able to make staffing cuts and sell the company headquarters in a "dignified" way to maintain the company's core values. The right surgeons in the next generation will be able to do the same and preserve the ASC's legacy their predecessors built.